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Royal Financial, Inc. Announces FY2014 Earnings for the Nine Months Ended March 31, 2014

CHICAGO, May 22, 2014 (GLOBE NEWSWIRE) -- Royal Financial, Inc. (the "Company") (OTCBB:RYFL), incorporated under the laws of Delaware on December 15, 2004, for the purpose of serving as the holding company of Royal Savings Bank (the "Bank"), announced the financial results for the third quarter end of fiscal year 2014.

For the third quarter ended March 31, 2014, the Company reported net income of $173,000, or $0.07 per common share, and net income of $7.6 million for the nine months ended March 31, 2014, or $3.03 per common share, after a $6.9 million benefit from the reversal of the valuation against deferred tax assets.

Comparison of Financial Condition at March 31, 2014 and June 30, 2013

The Company's total assets increased $21.5 million, or 20.85%, to $124.7 million at March 31, 2014, from $103.2 million at June 30, 2013.

Cash and cash equivalents increased $963,000, or 29.48%, to $4.2 million at March 31, 2014, from $3.3 million at June 30, 2013.

Securities available for sale increased $9.4 million, or 41.80%, to $32.0 million at March 31, 2014 from $22.6 million at June 30, 2013. The increase in the securities portfolio was related to purchases of government sponsored agency bonds and small diversified investment grade blocks of taxable general obligation municipal bonds.

Loans, net of allowance, increased $4.7 million, or 6.80%, to $73.6 million at March 31, 2014, from $68.9 million at June 30, 2013. The increase in loans was primarily a result of locally originated commercial loan growth, consisting of commercial real estate and multi-family properties.

The Company recorded a $6.9 million reversal of the valuation allowance against the deferred tax assets, partially offset by estimated income tax expense of $360,000, resulting in an increase in assets of $6.5 million for the period.

Total deposits increased $10.8 million, or 15.69%, to $79.7 million at March 31, 2014 from $68.9 million at June 30, 2013.

Federal Home Loan Bank advances increased $3.6 million, or 24.16%, to $18.5 million at March 31, 2014 from $14.9 million at June 30, 2013.

Total stockholders' equity increased $7.4 million, or 40.85%, to $25.5 million at March 31, 2014 from $18.1 million at June 30, 2013. The increase is primarily related to the deferred tax asset of $6.9 million net of $360,000 in estimated taxes and income of $1.1 million partially offset by a decrease in accumulated other comprehensive income of $248,000.

The allowance for loan losses was $1.4 million, or 1.81% of total loans, at March 31, 2014, as compared to $1.5 million, or 2.13% of total loans, at June 30, 2013. The Company believes, as of March 31, 2014, its allowance for loan losses was adequate to cover probable incurred losses. Nonperforming assets were $3.3 million, or 2.66%, at March 31, 2014 compared to $3.6 million, or 3.48%, at June 30, 2013.

The Bank is required to maintain regulatory capital sufficient to meet Tier 1 leverage, Tier 1 risk-based and total risk-based capital ratios of at least 4.0%, 4.0%, and 8.0%, respectively. At March 31, 2014, the Bank exceeded each of its capital requirements with ratios of 16.55%, 27.00%, and 28.25%, respectively. At March 31, 2014, the book value per common share, shares outstanding 2,507,112, was $10.17 compared to the book value per common share, shares outstanding 2,507,112, was $7.22 at June 30, 2013.

Comparison of Results of Operation for the Three and Nine Months Ended March 31, 2014 and 2013

The net income for the three months ended March 31, 2014 was $173,000, an increase in net income of $3,000, from the same period in 2013. The net income for the nine months ended March 31, 2014 was $7.6 million, an increase in net income of $7.2 million, from the same period in 2013.

The increase in net income for the three months ended March 31, 2014 resulted primarily from a decrease in non-interest expense of $63,000, a decrease in the provision for loan losses of $70,000, partially offset by a decrease in net interest income of $58,000, a decrease in non-interest income of $34,000 and an increase in provision for income taxes of $38,000.

The increase in the net income for the nine months ended March 31, 2014 resulted primarily from the decrease in the provision for income taxes of $6.5 million, a direct result of the reversal of the valuation allowance against deferred tax assets of $6.9 million, net of current estimated state income tax of $360,000, a decrease in provision for loan losses of $500,000, a decrease of non-interest expense of $345,000, an increase in net interest income of $209,000, partially offset by a decrease in non-interest income of $372,000.

The complete audited consolidated financial statements for 2013 and 2012 are available at www.royal-bank.us.

Royal Savings Bank offers a range of checking and savings products and a full line of home and commercial lending solutions. Royal Savings Bank has been operating continuously in the south and southeast communities of Chicago since 1887, and currently has two branches in Chicago, with lending centers in Homewood and St. Charles Illinois. Visit Royal Financial, Inc. and Royal Savings Bank at www.royal-bank.us

Forward Looking Statements: This press release may include forward-looking statements. These forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, can generally be identified by use of the words "believe," "expect," "intend," "anticipate," "estimate," "project," or similar expressions. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain and actual results may differ materially from those predicted in such forward-looking statements. Factors that could have a material adverse effect on the operations and future prospects of the Company and the Bank include, but are not limited to, changes in interest rates; the economic health of the local real estate market; general economic conditions; continued credit deterioration in our loan portfolio that would cause us to further increase our allowance for loan losses; legislative/regulatory changes; monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and the Federal Reserve Board; the quality or composition of the loan and securities portfolios; demand for loan products in our market areas; deposit flows; competition; demand for financial services in our market areas; and changes in accounting principles, policies, and guidelines. These risks and uncertainties should be considered in evaluating forward-looking statements, and undue reliance should not be placed on such statements.

Royal Financial, Inc and Subsidiary
Consolidated Statements of Financial Condition
March 31, 2014 and June 30, 2013
March 31, 2014 June 30, 2013
(Unaudited)
Assets
Cash and non-interest bearing balances in financial institutions $ 878,187 $ 893,499
Interest bearing balances in financial institutions 3,297,435 2,274,266
Federal funds sold 51,887 97,148
Total cash and cash equivalents 4,227,509 3,264,913
Securities available for sale 32,038,786 22,594,623
Loans receivable, net of allowance for loan losses of $1,358,897 at March 2014 and $1,508,966 at June 2013 73,632,474 68,945,527
Federal Home Loan Bank stock, at cost 1,295,000 1,295,000
Premises & equipment, net 4,211,211 4,217,182
Land held for sale 265,000 265,000
Accrued interest receivable 511,898 447,888
Other real estate owned 1,795,000 1,895,000
Deferred tax asset 6,493,520 -
Other assets 219,097 249,592
Total assets $ 124,689,495 $ 103,174,725
Liabilities & Stockholders' Equity
Deposits $ 79,692,896 $ 68,886,926
Advances from borrowers for taxes and insurance 552,485 866,913
Federal Home Loan Bank advances 18,500,000 14,900,000
Accrued interest payable and other liabilities 449,403 419,710
Total liabilities 99,194,784 85,073,549
Stockholders' equity
Preferred stock $0.01 par value per share, authorized 1,000,000 shares, no issues are outstanding - -
Common stock, $0.01 par value per share, authorized 5,000,000 shares, 2,645,000 shares issued at March 31, 2014 and June 30, 2013 26,450 26,450
Additional paid-in capital 23,793,145 23,759,673
Retained earnings (deficit) 2,420,799 (5,187,593)
Treasury stock, 137,888, at cost (1,012,925) (1,012,924)
Accumulated other comprehensive income 267,242 515,570
Total stockholders' equity 25,494,711 18,101,176
Total liabilities and stockholders' equity $ 124,689,495 $ 103,174,725
This report has not been prepared in accordance with Securities and Exchange Commission ("SEC") rules applicable to SEC registrant companies and is not intended to comply with such rules.
Royal Financial, Inc and Subsidiary
Consolidated Statements of Operations
Three and Nine months ended March 31, 2014 and 2013
(Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
2014 2013 2014 2013
Interest income
Loans $ 1,014,683 $ 1,051,994 $ 3,030,090 $ 2,566,810
Securities 218,082 225,010 573,888 819,837
Federal funds sold and other 2,617 2,273 7,125 5,642
Total interest income 1,235,382 1,279,277 3,611,103 3,392,289
Interest expense
Deposits 51,539 35,560 138,027 111,109
Borrowings 7,950 9,844 18,900 36,071
Total interest expense 59,489 45,404 156,927 147,180
Net interest income 1,175,893 1,233,873 3,454,176 3,245,108
Provision/(Credit) for loan losses - 70,000 (354,785) 145,000
Net interest income after provision/ (credit) for loan losses 1,175,893 1,163,873 3,808,961 3,100,108
Non-interest income
Service charges on deposit accounts 39,645 39,663 125,254 124,518
Secondary mortgage market fees 5,768 19,347 63,694 113,897
Income on other real estate owned 29,751 50,072 115,431 147,596
Gain on sale of investment securities - - - 290,816
Other 448 260 849 761
Total non-interest income 75,612 109,342 305,228 677,588
Non-interest expense
Salaries and employee benefits 379,900 350,495 1,236,642 1,203,359
Occupancy and equipment 196,040 176,264 518,679 537,089
Data processing 83,751 87,683 235,314 264,369
Professional services 111,978 125,739 374,817 397,357
Director fees 28,600 15,100 86,200 44,950
Marketing 100 292 8,124 5,696
FDIC insurance expense 16,685 16,438 79,055 109,726
Insurance premiums 28,013 36,221 51,934 49,869
Foreclosed asset expense 128,237 229,949 172,246 337,815
Loss on property valuation - - - 168,350
Other 62,469 60,730 236,357 225,938
Total non-interest expense 1,035,773 1,098,911 2,999,368 3,344,517
Income before income taxes 215,733 174,302 1,114,821 433,179
Provision (Benefit) for income taxes 42,500 4,000 (6,493,520) 16,000
Net income $ 173,233 $ 170,302 $ 7,608,341 $ 417,179
Basic and diluted earnings per share $ 0.07 $ 0.07 $ 3.03 $ 0.17
This report has not been prepared in accordance with Securities and Exchange Commission ("SEC") rules applicable to SEC registrant companies and is not intended to comply with such rules.

CONTACT: Mr. Leonard Szwajkowski President and CEO Telephone: (773) 382-2111 E-mail: lszwajkowski@royal-bank.usSource:Royal Financial, Inc.